Stock Analysis

Pentamaster International Limited Just Missed EPS By 9.8%: Here's What Analysts Think Will Happen Next

Published
SEHK:1665
Source: Shutterstock

As you might know, Pentamaster International Limited (HKG:1665) last week released its latest annual, and things did not turn out so great for shareholders. Results look to have been somewhat negative - revenue fell 4.6% short of analyst estimates at RM508m, and statutory earnings of RM0.049 per share missed forecasts by 9.8%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Pentamaster International

earnings-and-revenue-growth
SEHK:1665 Earnings and Revenue Growth February 28th 2022

Taking into account the latest results, the most recent consensus for Pentamaster International from two analysts is for revenues of RM627.5m in 2022 which, if met, would be a major 24% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 25% to RM0.061. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM642.6m and earnings per share (EPS) of RM0.075 in 2022. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

The consensus price target fell 8.8% to HK$1.60, with the weaker earnings outlook clearly leading valuation estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Pentamaster International's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 17% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 22% per year. Pentamaster International is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Pentamaster International , and understanding it should be part of your investment process.

Valuation is complex, but we're helping make it simple.

Find out whether Pentamaster International is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis